Fannie Mae is Increasing Mortgage Fees for Borrowers with Good Credit

In response to the declining housing market in 2008, Fannie Mae created a new mortgage fee: the adverse market delivery charge. The adverse market delivery charge was intended to discourage borrowers with lower credit scores by charging them an additional fee to secure a loan. Borrowers with high credit scores, of 740 and above, were not subject to the fee and paid the lowest interest rates. Borrowers with good credit scores (i.e. between 720 nad 739) paid a fee also, but it was a smaller fee and it only applied to loans that were for sums between 75.01% and 80% of a home’s value.

Effective April 1, 2011, however, Fannie Mae will charge the adverse market delivery charge to everyone, even borrowers with exceptional credit scores (i.e. over 740). Of course, borrowers with the best credit scores will pay the smallest fee. Borrowers with lower credit scores (i.e. below 620), on the other hand, will pay the highest fee, as much as 3.25% of the loan amount.

Is it fair to penalize homebuyers with good credit? Whether it’s fair or not, Fannie Mae’s mortgage fee will be widely implemented, since Fannie Mae will not purchase mortgages from lenders who do not meet their standards. Banks are widely expected to implement Fannie’s Mae’s newest requirements in the coming months!